This morning's key headlines from GenerationalDynamics.com:

• Cyprus may punish Russia for not bailing them out
• Generational Dynamics website attacked by hackers
• Obama negotiates Israeli apology to Turkey for flotilla incident
• Buddhist vs Muslim ethnic violence explodes in central Myanmar (Burma)

Cyprus may punish Russia for not bailing them out

Cyprus's government will be spending a long, tough weekend in negotiations to prevent total collapse of the economy on Tuesday. Cyprus has to find 6 billion euros to contribute to a bailout fund to which the EU will provide a 10 billion euro loan. 

The original plan was to tax small bank savers 6.7% of their savings, and to tax large savers, with accounts above 100,000 euros, 9.9%. This was the original "Plan A" formula, and it was adopted by Cyprus did not want to go above a 10% haircut for the banks' Russian oligarch depositors. 

The 6.7% tax for small savers has now been thrown out for good, as accounts under 100,000 euros are supposed to be protected by deposit insurance. To make up the difference, first Russia was asked to help bail out Cyprus, but that deal collapsed completely on Friday. 

Also, Cyprus is considering nationalizing its pension system. The Greek Orthodox Church has also volunteered a large amount of real estate. But those won't bring in nearly enough money. So that leaves only one major source of money: The Russian oligarchs with billions of euros of deposits in Cyprus banks. 

There is now talk of taxing large accounts 20-25%, which can only be viewed as punishment for Russia for not helping Cyprus out when they had the chance. Kathimerini and Cyprus Mail

Generational Dynamics website attacked by hackers

The Generational Dynamics web site was attacked by hackers on Friday and crashed. The site will be brought back up over the weekend with limited functionality and content. All content will be available again in a few days. 

No data was lost from the Generational Dynamics forum. The forum will be moved to another web host over the weekend, since there's a suspicion that the hacker exploited some vulnerability in the forum software to attack the main web site. The new forum location, with all posts reserved, will be announced soon. 

I may have lost some e-mail messages sent to me on Friday. Please consider re-sending any messages that you sent between 11 am and 7 pm ET. 

As before, I apologize for any inconvenience. 

Obama negotiates Israeli apology to Turkey for flotilla incident

Turkey's president Recep Tayyip Erdogan scored a major diplomatic coup on Friday when Israel's prime minister Benjamin Netanyahu apologized to Erdogan for the deaths of nine Turkish citizens in the 2010 Mavi Marmara flotilla incident. 

The apology was mediated by U.S. President Barack Obama as he ended his visit to the Mideast. The Mavi Marmara was a boat in a flotilla that was launched to break Israel's sea blockage of Gaza. The Israeli Defense Forces (IDF) boarded the flotilla ships, and in the exchange of fire, the nine Turkish citizens were killed. Erdogan cut diplomatic relations with Israel, and made the following demands, which have now been addressed by Netanyahu's apology: 

• Erdogan demanded an apology. Netanyahu apologized for the loss of life and for the "operational errors" that caused them.
• Erdogan demanded compensation for the victims' families. Netanyahu agreed to set up a "humanitarian fund" from which compensation could be paid.
• Erdogan demanded that the blockade of Gaza be lifted. Netanyahu pointed out that Israel has already lifted some limitations, including the passage of goods and people to the Palestinian territories, including Gaza, and that this will continue as long as quiet is preserved.

Palestinian commentators condemned Erdogan's acceptance of the apology, because there was effectively no change at all to the status of the Gaza blockade. 

The break in diplomatic relations between Turkey and Israel has caused problems for both countries. Israel has been facing increased isolation throughout Europe, especially with Turkey which had been a major trading partner. 

Turkey faced isolation as well, as became apparent when Egypt and Turkey were mediating last year's war between Israel and Hamas, and Erdogan had to bow out because he refused to talk to the Israelis. 

The restoration of diplomatic relations will allow closer cooperation on the Syria issue, and so it's probably a bitter pill for Iran, Hizbollah and the Syrian regime. Israel Ministry of Foreign Affairs and Jerusalem Post and Hurriet (Ankara)

Buddhist vs Muslim ethnic violence explodes in central Myanmar (Burma)

Officials have declared a state of emergency in Meikhtila in central Myanmar after three days of ethnic violence between Buddhist monks and Muslims. 

Troubles began on Wednesday after an argument broke out between a Muslim gold shop owner and his Buddhist customers. 

A Buddhist monk was among the first killed, inflaming tensions that led a Buddhist mob to rampage through a Muslim neighbourhood. 

At least 6,000 Muslims have fled their homes and taken refuge in a stadium. Meikhtila is a majority Muslim city in the majority Buddhist nation of Burma. 

Relations between Muslims and Buddhists have been cordial for decades, but tensions have been increasing since last year's incident in Rakhine state in southeast Burma, where Buddhists massacred Rohingya Muslims who had arrived in decades past from Bangladesh. AP 

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